- Plutus Lending has reached a settlement with the SEC over allegations of securities law violations through its Abra product
- Abra has been charged with illegally offering and selling unregistered securities while operating as an unregistered investment company
- Abra has agreed to settle and has wound down the “Abra Earn” product to avoid a costly lawsuit
Plutus Lending has reached a settlement with the US Securities and Exchange Commission (SEC) following allegations of federal securities law violations through its Abra product. The SEC charged Abra with illegally offering and selling securities without proper registration as well as operating as an unregistered investment company, in a charge sheet that is becoming second nature to those in the cryptocurrency space. Abra has agreed to settle to avoid a costly lawsuit and has wound down “Abra Earn”, the product in question.
Earn Programs in the Firing Line Again
The SEC’s allegations stem from Plutus Lending’s operation of its Abra Earn program between July 2020 and June 2023. Through this program, Abra allowed US retail investors to deposit various cryptocurrencies in exchange for interest payments.
According to the SEC, these activities qualified as the offer and sale of securities, which Abra failed to register as required under the Securities Act of 1933. Additionally, the SEC claimed that Abra operated as an unregistered investment company, violating the Investment Company Act of 1940.
Abra’s alleged misconduct also included acting as its own underwriter by offering and selling the Abra Earn securities directly to the public, despite lacking the necessary registration and a board of directors, which is a violation of federal law.
Abra Returned Funds to Users
As part of the settlement, Abra has agreed to pay civil penalties and is permanently enjoined from violating the relevant sections of the Securities Act and the Investment Company Act. The company has also wound down the Abra Earn program, returning nearly all investor assets by July 2023, with just $2.9 million in assets remaining on the platform as of June 2024.
Despite it being a settlement, it nonetheless adds another notch to the SEC’s bedpost, a bedpost which is becoming worryingly full as far as crypto supporters are concerned.
